After the markets closed on Thursday, Humble & Fume Inc. (CSE: HMBL) (OTCQX: HUMBF) posted earnings results that saw falling revenue and rising losses, despite the company touting its quarterly savings and high long-term upside. The distributor of cannabis and cannabis accessories reported its financial results for the fourth quarter and year ending June 30, 2022.
Revenue for the fourth quarter totaled $15 million versus $19 million in the same time period last year. The company has previously said that dips in revenue could be lent to its departure from “low-margin, slow-moving accessories” for products with higher yields.
Net losses came out to $7.7 million for the quarter, versus $2.5 million in the previous period. The company said that the rise in losses was driven by a one-time asset impairment expense of $3.2 million related to the closure of a concentrate processing facility. The organization incurred rising costs of $2.8 million to launch the distributing business.
Earnings were a loss of seven cents per share.
“As our business fundamentals are improving, we can prioritize the market expansion of the Cannabis business that will generate positive gross margins,” said Joel Toguri, Chief Executive Officer of Humble.
Full-year revenues totaled $66 million versus $74 million in fiscal 2021. Net losses rose year-over-year, ending 2022 with a loss of $16.1 million versus $12 million in 2021.
Since Humble received an $8 million investment from Green Acre Distribution last November, the California cannabis distribution business says is fully operational with statewide sales coverage, trade marketing, and physical distribution capabilities. It posits that the business can deliver products to 95% of California dispensaries within a twenty-four turnaround. The company owns two warehouses and 15 delivery vehicles.
Humble also said that cannabis now represents 17% of gross margin dollars in the fourth quarter versus 10% in the prior quarter.
In April, the company formed HC Solutions Holdings Inc. — a joint venture with their investor Green Acre Distribution to further the cannabis distribution business throughout the United States, initially focused on accelerating the company’s expansion into cannabis distribution operations in California.
Since then, Green Acre Distribution has injected around US$8 million into the venture, granting it 45% ownership. Green Acre Capital funded its investment through an option agreement with Johnson Brothers, a leading wine, spirits, and beer distributor in the United States.
Also last month, Humble entered an exclusive sales and distribution agreement with leading cannabis brand Cookies. Humble said that it would distribute all products marketed and sold under the Cookies brand name in California. Sales and marketing support will include multi-channel advertising, promotional activities, and the stewardship of a focused brand ambassador team.
“As we look ahead, we are focused on accelerating our Cannabis expansion efforts in the U.S., building stronger relationships with our brand and retail partners throughout North America, and seeking out the most sought-after cannabis brands,” Toguri said. “We are committed to becoming the industry-leading distributor of cannabis and accessories, generating a sustainable profit and positive cash flow to deliver long-term shareholder value.”